Free-to-Play Regulation: Where Do We Stand?

A few weeks ago the EU Commission made the headlines by investigating apps and games advertised as “free” but containing associated costs in the form of in-app purchase items (IAP). The Commission met with national enforcement authorities as well as large tech companies to discuss consumer concerns over the app economy and published a document summing up their common position on the topic.While the Free-to-Play (F2P) model has now become a mainstream concept for anyone remotely related to the mobile games industry, it is only recently that the European Commission as well as several national authorities started looking for ways to bring more regulation into it.As a mobile games marketing platform working with and in the interest of mobile game publishers on a daily basis, we thought to use this opportunity to take a deeper look into the current state of various F2P regulation policies in the US, in the UK as well as at the European Union Level.United StatesUnited StatesUnited States United StatesThe United States does not currently have any specific regulations in F2P matters. However, at the beginning of the year the Federal Trade Commission (FTC) reached an agreement with Apple over abusive in-app purchases resulting from insufficient parental controls. In particular, the FTC reproached the platform’s lack of warning over the fact that users were not required to re-enter their iTunes password in a 15-minute window after the first purchase. This issue was in the meantime rectified in the iOS 7.1 update:

Some commentators pointed out that the decision to punish Apple specifically was somewhat unfair since Google Play offers a default 30-minute window (although it now seems to warn users about it).No further developments have been reported to date.United KingdomTo our knowledge the UK has the most extensive and advanced F2P regulation body in the form of the Office of Fair Trading’s (OFT) “Principles for online and app-based games”, 8 guidelines to bring more transparency to F2P games and streamline the way IAP items are presented in the game.The OFT gave UK-based developers until April 1st to comply with the principles or “face legal action”.When reading through the document (which we recommend you do), it appears that the British authority did a great job in really diving into the topic and mapping out a broad array of various in-app purchase scenarios, providing detailed and sensible examples of which situations would or would not comply with each of the 8 principles put forward.The legal advisory firm Osborne Clarke published a good summary here, but below is our own digest concisely summarized in 6 major points:

All IAP items and their cost must be clearly indicated before the user downloads the game.

Game publishers must provide an easy way to be contacted.

Messages prompting the users to complete an in-app purchase should be clearly identifiable and distinguished from the gameplay. For instance, items available for purchase should be displayed on a specific page within the game and indicated as such.

Games should not mislead the consumer into thinking that completing a purchase is necessary to move forward in the gameplay (typically the case of a “pay or wait” situation).

Games should not exploit the inexperience and vulnerability of younger players, especially by influencing them into completing purchases (in particular for items which can otherwise be obtained for free through prolonged gameplay).

In-game payments should be expressly authorized (this directly addresses the issue of the time window during which no password is required to complete a purchase).

European UnionAs mentioned earlier, the European Commission recently brought up the topic with a particular focus on the conditions with which games are advertised as “free” although they include the possibility to make in-app purchases.Here is what the common document states on the matter:

The use of the word “free” (or similar unequivocal terms) as such, and without any appropriate qualifications, should only be allowed for games which are indeed free in their entirety, or in other words which contain no possibility of making in-app purchases, not even on an optional basis.The use of the word “free” (or similar) may be tolerated for games which are not entirely free, if it is complemented by appropriate qualifications characterising upfront in a clear manner what elements are for free and which ones can be purchased. In such cases, the consumer should be able to access discrete parts of the game that stand alone without the need to make purchases. “Free” may not be used where the consumer cannot, without making in-app purchases, access content integral to gameplay or play the game in a way that he/she would reasonably expect.

In short, two scenarios are presented:

The game requires payment in order to access certain parts and/or features of the game, in which case the game can in no case be advertised as free. This concerns freemium games, in which a payment is for instance required to access further levels.

The game contains IAP items but does not require the users to make any purchase to enjoy it in its entirety, in which case the game can be advertised as free, under the condition that all paid items be clearly and correctly indicated upfront. This is typically the case for most Free-to-Play games.

This common initiative has yet to be followed by concrete actions at the European and member state level.Whose responsibility is it?From a consumer perspective, these initiatives by national and EU authorities make sense in order to bring more trust and transparency into our industry. All in-game payments should be the result of an informed decision, especially when it comes to younger users. In the current debate, it should however also be acknowledged that Free-to-Play games bring great value to users by allowing them to test and play the product for free.Then, from a more macro perspective, we need to remember that app and game publishers are part of a broader ecosystem, and some of the points (rightfully) mentioned above by authorities should indeed befall app stores rather than developers or publishers. In particular, the requirement to clearly disclose information on in-app purchase items should be made available on the app store page (as is already implemented in the Apple App Store). This should also be the case for payment mechanisms (such as the password-free window). On the other hand, everything related to the way IAP items are introduced and presented to the users within the game should on the other hand be the responsibility of the game publisher.The mobile games industry is currently experiencing the first signs of tightened regulations and more will likely follow as the market continues to expand.We’ll make sure to keep you updated on further developments.Do you have questions, want to share your own opinion on the topic or would like to contribute to the blog? Let us know!If you would like what you read, and would like to get more insights from AppLift, subscribe to our newsletter through the form below![yks-mailchimp-list id=”b97ff5c6cc”]

Thomas heads up content marketing at Applift. As such he’s in charge of sourcing, curating, creating and distributing insightful content to increase visibility and thought leadership for the company. Thomas loves to scrutinize the relentless and thrilling developments of the mobile industry. You can follow him on Twitter and LinkedIn.

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